Philips 2006 Annual Report Download - page 63

Philips Annual Report 2006 63
The Shaving & Beauty business strengthened its worldwide
No. 1 position in male electric shaving. Almost 5% value
share was lost in female depilation due to portfolio issues,
competitive pressure and turbulence in key markets,
but DAP still holds a clear No. 2 position in all markets
excluding the US. In male grooming, the Bodygroom
supported share gains of around 3% in Western Europe
and the US.
In the Domestic Appliances business, the success of Senseo
has led competitors to introduce high-end multi-function
fi lter coffee makers; in 2006 this put pressure on DAP’s
Western European drip fi lter value share, which decreased
by around 1%. DAP will be entering the espresso segment
in 2007. Western European 2006 market shares for other
kitchen appliances were stable or slightly positive. In the
fragmented Western Europe fl oor care market, DAP
shares were at similar levels to 2005; a gain of almost
5% was realized in China. In garment care, DAP’s leading
position in irons grew by almost 1% in Western Europe.
On a geographic axis, share gains in Eastern Europe were
offset by small share losses in China.
In the Health & Wellness business, DAP was able to extend
its lead in rechargeable power toothbrushes in North
America by 2%, while in Western Europe it lost an estimated
2% share. In a declining market for solaria, DAP increased
market share through its Innergize offering and managed
to maintain sales.
While DAP’s leadership positions remain under
pressure from ongoing commoditization and consolidating
competition, both in the developed markets and increasingly
in developing markets, the division has product offerings
to outperform the estimated low-single-digit value growth
in the small domestic appliances market. A constant
focus on powerfully branded, easy-to-experience
innovations that are designed around the consumer is
expected to yield premium prices and drive growth.
2006 fi nancial performance
Full-year sales grew by 21% on a nominal basis, partly due
to the acquisitions of Lifeline Systems in the fi rst quarter
and Avent in the third quarter. Comparable sales growth
of 11% was well above the targeted 7%, mainly driven by
Shaving & Beauty (good acceptance of SmartTouch/Speed-
XL shavers worldwide and new Bodygroom products
in Europe and North America) and Oral Healthcare
In the second quarter of 2006 the Consumer Healthcare
Solutions (CHS) business was set up to deliver monitoring,
treatment and care services for seniors and chronically
ill people
outside the hospital, helping patients to live
independently
and manage their health at home. The
business focuses
on sales to older people, their families
and care providers
through non-retail channels and
consists of two business units: Lifeline and Connected
Care. Lifeline comprises the activities of the former
Lifeline Systems, a leading provider of personal emergency
response services which
Philips acquired in March 2006.
Connected Care comprises
remote patient management
platforms like Telemonitoring
Solutions and Motiva,
focusing on patient monitoring commencing at point
of hospital discharge, as well as the ongoing management
of chronic disease from the home. Retail channels continue
to be served by the Health & Wellness business.
Currently, Consumer Healthcare Solutions works with
more than 2,500 healthcare providers and monitors
more than 500,000 subscribers directly or on behalf
of our partners. With a growing need to reduce the
clinical and fi nancial burden of (health)care due to the
aging population, Consumer Healthcare Solutions
is a long-term growth business.
For 2007, Lifeline will focus on initiatives to maintain
its leadership position in medical alert services and
to increase market share through targeted acquisitions,
improving the growth and profi tability of the senior living
segment, it will also focus on the development of a global
rollout strategy. The CHS Connected Care business unit
will continue to focus upon closure and implementation
of Motiva sales contracts, leveraging synergies with
Lifeline on remote
patient monitoring and expansion
of Philips Telemonitoring
Services through Lifeline’s
Home Health Agency channel.
Markets
DAP specifi cally targets those product/market
combinations where it believes it can achieve leading
market share positions. In Western Europe the small
domestic electrical appliances market grew by over 5%
in value terms in 2006; China and Eastern Europe showed
high-single-digit and double-digit growth respectively. The
North American market was more or less fl at for DAP.
In the Western European market, price erosion remained
limited. On average, DAP’s value share continued to grow
by around 0.5% in Western Europe, but was under pressure
in Eastern Europe.
54 The Philips sectors
Domestic Appliances
and Personal Care
86 Risk management 100 Report of the Supervisory Board 110 Financial Statements